14 March 2019

Financial Markets in brief – new regulations and other developments

There have been many developments in national and European financial markets regulation during the past two months. We provide a brief overview of these developments, which include a political agreement on the EU Banking Reform Package, the publication of EBA’s guidelines for outsourcing arrangements, and a provisional agreement on the review of the prudential framework for investment firms.

EU Banking Reform package

Following ambitious regulatory reforms to bring back and safeguard financial stability and market confidence after the financial crisis, the European Commission published these proposals to complete this reform agenda in 2016:

  • implementing outstanding elements resulting from international standards set by the Basel Committee and Financial Stability Board, and
  • a comprehensive review of existing EU banking regulation.

On 15 February 2019, the Council of the EU announced that political agreement has been reached on the whole EU Banking Reform Package. The texts of the political agreement were also published. These will undergo a legal wording revision. Subsequently, the European Parliament and the Council of the EU will be asked to adopt the proposals.

The agreement relates to the amending of two regulations and two directives:

  • Bank capital requirements (amendments to the Capital Requirements Regulation and Capital Requirements Directive IV);
  • Recovery and resolution of banks (amendments to the Bank Recovery and Resolution Directive and the Single Resolution Mechanism Regulation).

Minister of Finance consults on 2019 Financial Markets Amendment Decree

The Minister of Finance has launched a consultation on the draft 2019 Financial Markets Amendment Decree. The draft Decree includes: rules for banks and payment services providers during the product development process, small non-financial inducements received by investment firms, antecedents in relation to integrity tests, abolishment of the objective indicator for third high-risk countries in relation to anti-money laundering rules, and additional rules implementing the Solvency II directive and MiFID II. Comments must be submitted by 25 March 2019.

EBA guidelines for outsourcing arrangements

Last year, we reported on the European Bank Authority’s consultation on draft guidelines for outsourcing arrangements. These guidelines will replace the current guidelines issued by the Committee of European Banking Supervisors (CEBS) in 2006. The final revised guidelines on outsourcing arrangements were published on 25 February 2019 and will enter into force on 30 September 2019. The 2017 recommendation on outsourcing to cloud service providers has been integrated into the revised guidelines.

Review of the prudential framework for investment firms

On 26 February 2019, the Council of the EU announced that the Council’s Romanian presidency and the European Parliament had reached a provisional agreement on a package of new prudential requirements and supervisory arrangements for investment firms. The political agreement will be submitted to EU ambassadors for endorsement. Subsequently, it will undergo a legal wording revision. The European Parliament and the Council of the EU will then be asked to adopt the package. The agreement relates to the amending of the CRR, CRD IV, MiFIR, MiFID II, and the EBA Regulation.

Dutch government advises against adoption of remuneration bill

In July 2018, several members of the Dutch Parliament submitted a members’ bill to Parliament amending current remuneration legislation. The members want to tighten the definition of fixed remuneration and introduce a requirement for systemically relevant banks to obtain an approval from the Minister of Finance before setting or increasing the fixed remuneration of a managing director. In February 2019, the Minister of Finance indicated that the government’s advice to Parliament is not to adopt this bill.

Brexit and the insurance sector

The European Insurance Supervisor (EIOPA) and all EEA national competent authorities (NCAs) have agreed on no-deal Brexit Memoranda of Understanding (MoUs) with the Bank of England in the latter’s capacity as the Prudential Regulation Authority and the Financial Conduct Authority of the United Kingdom (UK). The MoUs cover supervisory cooperation, mutual assistance and regular exchange of information. They are aimed at maintaining sound prudential and conduct supervision and financial stability of the financial markets.

EIOPA has also issued Recommendations for the insurance sector in light of Brexit, calling on national competent authorities to minimise the damage to insurance policyholders and beneficiaries in case of a no-deal Brexit.

The Dutch Association for Insurers has launched a Brexit website.

Political agreement on Pan-European Pension Product

On 13 February 2019, the Council of the EU and the European Parliament reached a political agreement on the proposal for a European regulation on a pan-European pension product (PEPP). The text of the political agreement was also published; this will undergo a legal wording revision. Subsequently, the European Parliament and the Council of the EU will be asked to adopt the proposals. The Second Chamber of Dutch Parliament had requested the Dutch Cabinet to vote against the adoption of this proposal for a European regulation.

Other publications

EC

EP

Council of the EU

EBA

ESMA

EIOPA

ECB

Official Journal of the EU

MinFin

MinSZW

AFM

DNB

Other

 

 

 

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